NOTES OF CONFIDENCE INTERVAL

Q1.a. A management consulting firm has installed a new computer-based electronic billing system
in a Hamilton, Ohio, trucking company. The population mean payment time using the trucking
company Using system was approximately old bill equal to, but no less than, 39 days. In order to
assess whether the population mean payment time, using the new billing system is substantially less
than 39 days, the consulting firm will use the sample of n= 65 payment and the sample mean is
18.1077days, and we will assume that the true value of the population standard deviation for the
new billing system is 4.2 days. Find a 99% confidence interval. Also comment on the result.
SOLUTION: Let 𝝁 = the population mean payment time in days, using the new billing system.
𝝈
∵ 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝝁 is 𝒙 ̅ ± 𝒛𝜶 . We are given that 𝒙
̅ = 𝟏𝟖. 𝟏𝟎𝟕𝟕, 𝒏 = 𝟔𝟓
𝒏 𝟐 √
& 𝝈 = 𝟒. 𝟐.
𝜶
For 99% CI: 𝟏 − 𝜶 = 𝟏 − 𝟎. 𝟗𝟗 ⟹ 𝜶 = 𝟎. 𝟎𝟏 ∴ = 𝟎. 𝟎𝟎𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟎𝟓 = 𝟐. 𝟓𝟖
𝟐 𝟐
𝟒.𝟐
Hence 𝟗𝟗% CI for 𝝁 : 𝟏𝟖. 𝟏𝟎𝟕𝟕 ± (𝟐. 𝟓𝟖) ( )
√𝟔𝟓
Thus the 𝟗𝟗% confidence limits for the population mean payment time in days, using the new
billing system is:
(𝟏𝟔. 𝟕𝟔, 𝟏𝟗. 𝟒𝟓)
We may conclude from above CLs that the population mean payment time, 𝜇, using the new billing
system is substantially less than 39 days.
b. i: A sample of size 100 produced the sample mean of 16. Assuming the population standard
deviation is 3. Compute a 95% confidence interval for the population mean.
ii: Assuming the population standard deviation is 3. How large should a sample be to estimate the
population mean with a margin of error not exceeding 0.5.
SOLUTION:
𝝈
i. ∵ 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝝁 is 𝒙 ̅ ± 𝒛𝜶 .
𝒏 𝟐 √
̅ = 𝟏𝟔, 𝒏 = 𝟏𝟎𝟎 & 𝝈 = 𝟑.
We are given that 𝒙
𝜶
For 95% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ 𝟐 = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐
𝟑
Hence 𝟗𝟓% CI for 𝝁 : 𝟏𝟔 ± (𝟏. 𝟗𝟔) ( )
√𝟏𝟎𝟎
Thus the 𝟗𝟓% confidence limits for the population mean payment time in days, using the new
billing system is:
(𝟏𝟓. 𝟒𝟏𝟐, 𝟏𝟔. 𝟓𝟖𝟖)
𝒛𝜶 𝝈 𝟐
𝟐 𝜶
ii. Sample size: 𝒏 = ( ) .For 95% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 =
𝒆 𝟐 𝟐
𝟏.𝟗𝟔×𝟑 𝟐
𝟏. 𝟗𝟔, 𝝈 = 𝟑 & 𝒆 = 𝟎. 𝟓. Therefore 𝒏 = ( ) = 𝟏𝟑𝟖
𝟎.𝟓
Q2. Consider the trash bag problem. Suppose that an independent laboratory has tested trash bags
and has found that no 30-gallon bags that are currently on the market have a mean breaking
strength of 50 pounds or more. On the basis of these results, the producer of the new, improved
trash bag feels sure that its 30-gallon bag will be the strongest such bag on the market if the new
trash bag’s mean least breaking strength of 50 pounds. The mean of the sample of 40 trash bag

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 NOTES OF CONFIDENCE INTERVAL

breaking strengths is 50.575. If the mean of the breaking strengths of all possible trash bags of the
new type is 50.50 pounds:
Calculate 95 percent and 99 percent confidence intervals for the new trash bag breaking
strengths.
SOLUTION: Let 𝝁 = the trash bag’s mean breaking strength in pounds.
𝝈
a. ∵ 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝝁 is 𝒙 ̅ ± 𝒛𝜶 .
𝒏 𝟐 √
̅ = 𝟓𝟎. 𝟓𝟕𝟓 pounds, 𝒏 = 𝟒𝟎 & 𝝈 = 𝟏. 𝟔𝟓 pounds.
We are given that 𝒙
𝜶
For 95% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ 𝟐 = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐
𝟏.𝟔𝟓
Hence 𝟗𝟓% CI for 𝝁 : 𝟓𝟎. 𝟓𝟕𝟓 ± (𝟏. 𝟗𝟔) ( )
√𝟒𝟎
Thus the 𝟗𝟓% confidence limits for the trash bag’s mean breaking strength in pounds, using the
new trash bags is:
(𝟓𝟎. 𝟎𝟔𝟑𝟕, 𝟓𝟏. 𝟎𝟖𝟔𝟑)
Hence we may conclude that the producer of the new, improved trash bag feels sure that its 30-
gallon bag will be the strongest such bag on the market if the new trash bag’s mean least breaking
strength of 50 pounds.
𝜶
For 99% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟗 ⟹ 𝜶 = 𝟎. 𝟎𝟏 ∴ 𝟐 = 𝟎. 𝟎𝟎𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟎𝟓 = 𝟐. 𝟓𝟖
𝟐
𝟏.𝟔𝟓
Hence 𝟗𝟗% CI for 𝝁 : 𝟓𝟎. 𝟓𝟕𝟓 ± (𝟐. 𝟓𝟖) ( )
√𝟒𝟎
Thus the 𝟗𝟗% confidence limits for the trash bag’s mean breaking strength in pounds, using the
new trash bags is:
(𝟒𝟗. 𝟗𝟎𝟏𝟗, 𝟓𝟏. 𝟐𝟒𝟖𝟏)
Hence we may conclude that the producer of the new, improved trash bag feels sure that its 30-
gallon bag will be the strongest such bag on the market if the new trash bag’s mean least breaking
strength of 50 pounds.

Q3. a. From a very large university, independent random samples of 120 students majoring
marketing and 90 students majoring in finance were selected. The mean GPA for the random
sample of marketing majors was found to be 3.08, and the mean GPA for the random sample of
finance majors was 2.88. From similar past studies the population standard deviation for the
marketing majors is assumed to be 0.42; similarly, the population standard deviation for the finance
majors is 0.64. Find a 95% confidence interval for the difference in mean GPA of these two groups
of students.
SOLUTION:
a. Let 𝝁𝟏 =Mean GPA of students majoring in marketing.
𝝁𝟐 = Mean GPA of students majoring in finance
𝝈𝟐 𝝈𝟐
𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝝁𝟏 − 𝝁𝟐 : (𝒙 ̅𝟐 ) ± 𝒛𝜶 √ 𝟏 + 𝟐
̅𝟏 − 𝒙
𝒏 𝒏 𝟐 𝟏 𝟐
̅𝟏 = 𝟑. 𝟎𝟖, 𝒙
𝒙 ̅𝟐 = 𝟐. 𝟖𝟖, 𝝈𝟐𝟏 = (𝟎. 𝟒𝟐)𝟐, 𝝈𝟐𝟐 = (𝟎. 𝟔𝟒)𝟐, 𝒏𝟏 = 𝟏𝟐𝟎, 𝒏𝟐 = 𝟗𝟎

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 NOTES OF CONFIDENCE INTERVAL

𝜶
For 𝟗𝟓% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐 𝟐

(𝟎.𝟒𝟐)𝟐 (𝟎.𝟔𝟒)𝟐
Hence 𝟗𝟓% CI for 𝝁𝟏 − 𝝁𝟐 is: (𝟑. 𝟎𝟖 − 𝟐. 𝟖𝟖) ± (𝟏. 𝟗𝟔)√ +
𝟏𝟐𝟎 𝟗𝟎
Thus the 𝟗𝟓% confidence limits for the true difference between the mean GPA of the two groups
of students:
(𝟎. 𝟎𝟒𝟕𝟗, 𝟎. 𝟑𝟓𝟐𝟏)
b. A manufacturer knows that the numbers of items produced per hour by machine A and by
machine B are normally distributed with a standard deviation of 8.4 items for machine A and a
standard deviation of 11.3 items for machine B. The mean hourly amount produced by machine A
for a random sample of 40 hours was 130 units; the mean hourly amount produced by machine B
for a random sample of 36 hours was 120units. Find the 95% confidence interval for the difference
in mean parts produced per hour by these two machines.
SOLUTION:
Let 𝝁𝟏 = Mean hourly amount produced by machine A.
𝝁𝟐 = Mean hourly amount produced by machine B
𝝈𝟐 𝝈𝟐
𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝝁𝟏 − 𝝁𝟐 : (𝒙 ̅𝟐 ) ± 𝒛𝜶 √ 𝟏 + 𝟐
̅𝟏 − 𝒙
𝒏 𝒏 𝟐 𝟏 𝟐
̅𝟐 = 𝟏𝟐𝟎, 𝝈𝟐𝟏 = (𝟖. 𝟒)𝟐 , 𝝈𝟐𝟐 = (𝟏𝟏. 𝟑)𝟐 , 𝒏𝟏 = 𝟒𝟎, 𝒏𝟐 = 𝟑𝟔
̅𝟏 = 𝟏𝟑𝟎, 𝒙
𝒙
𝜶
For 𝟗𝟓% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ 𝟐 = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐

(𝟖.𝟒)𝟐 (𝟏𝟏.𝟑)𝟐
Hence 𝟗𝟓% CI for 𝝁𝟏 − 𝝁𝟐 is: (𝟏𝟑𝟎 − 𝟏𝟐𝟎) ± (𝟏. 𝟗𝟔)√ +
𝟒𝟎 𝟑𝟔
Thus the 𝟗𝟓% confidence limits for the true difference between the mean GPA of the two groups
of students:
(𝟓. 𝟒𝟖𝟑𝟏, 𝟏𝟒. 𝟓𝟏𝟔𝟗)

Q4. a. In the department of management of a large university a random sample of thirty six students
of finance class that uses group-learning techniques, the mean examination score was found to be
76.12 and the sample standard deviation was 2.53. For an independent random sample of forty
students in another introductory finance class that does not use group learning techniques, the
sample mean and standard deviation of exam scores were 74.61 and 8.61, respectively. Estimate
with 95% confidence the difference between the two population mean scores.
SOLUTION:
``𝝁𝟏 =The mean examination score of students of finance class that uses group-learning
techniques.
𝝁𝟐 =The mean examination score of students of finance class that does not use group-learning
techniques.
When 𝐧𝟏 , 𝐧𝟐 > 𝟑𝟎 and 𝛔𝟐𝟏 and 𝛔𝟐𝟐 are unknown, an approx. 𝟏𝟎𝟎(𝟏 − 𝛂)% Confidence Interval for
𝑺𝟐 𝑺𝟐
𝝁𝟏 − 𝝁𝟐 : (𝒙 ̅𝟐 ) ± 𝒛𝜶 √ 𝟏 + 𝟐
̅𝟏 − 𝒙
𝟐 𝒏𝟏 𝒏 𝟐

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 NOTES OF CONFIDENCE INTERVAL

̅𝟐 = 𝟕𝟒. 𝟔𝟏, 𝑺𝟐𝟏 = (𝟐. 𝟓𝟑)𝟐 , 𝑺𝟐𝟐 = (𝟖. 𝟔𝟏)𝟐 , 𝒏𝟏 = 𝟑𝟔, 𝒏𝟐 = 𝟒𝟎

̅𝟏 = 𝟕𝟔. 𝟏𝟐, 𝒙
𝒙
𝜶
For 𝟗𝟓% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ 𝟐 = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐

(𝟐.𝟓𝟑)𝟐 (𝟖.𝟔𝟏)𝟐
Hence 𝟗𝟓% CI for 𝝁𝟏 − 𝝁𝟐 is: (𝟕𝟔, 𝟏𝟐 − 𝟕𝟒. 𝟔𝟏) ± (𝟏. 𝟗𝟔)√ +
𝟑𝟔 𝟒𝟎
Thus the approx. 𝟗𝟓% confidence limits for the true difference between the mean examination
score of students of the two groups of students:
(−𝟏. 𝟐𝟖𝟑𝟑, 𝟒. 𝟑𝟎𝟑𝟑)
b. Suppose that for a random sample of 200 firms that revalued their fixed assets, the mean ratio of
debt to tangible assets was 0.517 and the sample standard deviation was 0.148. For an independent
random sample of 400 firms that did not revalue their fixed assets, the mean ratio of debt to tangible
assets was 0.489 and the sample standard deviation was 0.158. Find a 99% confidence interval for
the difference between the two population means.
SOLUTION:
Let 𝝁𝟏 =The mean ratio of debt to tangible assets of firms that revalued their fixed assets.
𝝁𝟐 = The mean ratio of debt to tangible assets of firms that did not revalue their fixed assets.
When 𝐧𝟏 , 𝐧𝟐 > 𝟑𝟎 and 𝛔𝟐𝟏 and 𝛔𝟐𝟐 are unknown, an approx. 𝟏𝟎𝟎(𝟏 − 𝛂)% Confidence Interval for
𝑺𝟐 𝑺𝟐
𝝁𝟏 − 𝝁𝟐 : (𝒙 ̅𝟐 ) ± 𝒛𝜶 √ 𝟏 + 𝟐
̅𝟏 − 𝒙
𝟐 𝒏 𝟏 𝒏 𝟐

̅𝟏 = 𝟎. 𝟓𝟏𝟕, 𝒙
𝒙 ̅𝟐 = 𝟎. 𝟒𝟖𝟗, 𝑺𝟐𝟏
= (𝟎. 𝟏𝟒𝟖)𝟐, 𝑺𝟐𝟐 = (𝟎. 𝟏𝟓𝟖)𝟐, 𝒏𝟏 = 𝟐𝟎𝟎, 𝒏𝟐 = 𝟒𝟎𝟎
𝜶
For 𝟗𝟗% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟗 ⟹ 𝜶 = 𝟎. 𝟎𝟏 ∴ 𝟐 = 𝟎. 𝟎𝟎𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟎𝟓 = 𝟐. 𝟓𝟖
𝟐

(𝟎.𝟏𝟒𝟖)𝟐 (𝟎.𝟏𝟓𝟖)𝟐
Hence 𝟗𝟗% CI for 𝝁𝟏 − 𝝁𝟐 is: (𝟎. 𝟓𝟏𝟕 − 𝟎. 𝟒𝟖𝟗) ± (𝟐. 𝟓𝟖)√ +
𝟐𝟎𝟎 𝟒𝟎𝟎
Thus the 𝟗𝟗% confidence limits for the true difference between the mean ratio of debt to tangible
assets of the two firms:
(−𝟎. 𝟎𝟎𝟓𝟖, 𝟎. 𝟎𝟔𝟏𝟖)
Q5. A research group wants to estimate the proportion of consumers who plan to buy a scanner for
their PC during the next 3 months, whereas population proportion is 0.78
a. How many people should be sampled so that the sampling error is at most 0.04 with a 90%
confidence interval.
𝒛𝜶 𝟐
SOLUTION: ∵ 𝒏 > 𝟑𝟎 ∴ An approx. sample size 𝒏 = ( 𝒆𝟐 ) 𝒑𝒒
𝜶
With 𝟎. 𝟗𝟎% CI 𝟏 − 𝜶 = 𝟎. 𝟗𝟎 ⟹ 𝜶 = 𝟎. 𝟏 ∴ = 𝟎. 𝟎𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟓 = 𝟏. 𝟔𝟒𝟓, & 𝒆 = 𝟎. 𝟎𝟒
𝟐 𝟐
𝟏.𝟔𝟒𝟓 𝟐
𝒑 = 𝟎. 𝟕𝟖, 𝒒 = 𝟏 − 𝒑 = 𝟏 − 𝟎. 𝟕𝟖 = 𝟎. 𝟐𝟐. ∴ 𝒏 = ( 𝟎.𝟎𝟒 ) (𝟎. 𝟕𝟖)(𝟎. 𝟐𝟐) = 𝟐𝟗𝟎
b. What is the sample size required if the confidence is increased to 95%, keeping the sampling error
the same.
𝒛𝜶 𝟐
SOLUTION: ∵ 𝒏 > 𝟑𝟎 ∴ An approx. sample size 𝒏 = ( 𝒆𝟐 ) 𝒑𝒒
𝜶
With 𝟎. 𝟗𝟓% CI 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔, & 𝒆 = 𝟎. 𝟎𝟒
𝟐 𝟐

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 NOTES OF CONFIDENCE INTERVAL

𝟏.𝟗𝟔 𝟐
𝒑 = 𝟎. 𝟕𝟖, 𝒒 = 𝟏 − 𝒑 = 𝟏 − 𝟎. 𝟕𝟖 = 𝟎. 𝟐𝟐. ∴ 𝒏 = (𝟎.𝟎𝟒) (𝟎. 𝟕𝟖)(𝟎. 𝟐𝟐) = 𝟒𝟏𝟐
c. SOLUTION: What is the required sample size if the research group extends the sampling error
to 0.05 and wants a 98% confidence level.
𝒛𝜶 𝟐
∵ 𝒏 > 𝟑𝟎 ∴ An approx. sample size 𝒏 = ( 𝒆𝟐 ) 𝒑𝒒
𝜶
With 𝟎. 𝟗𝟖% CI 𝟏 − 𝜶 = 𝟎. 𝟗𝟖 ⟹ 𝜶 = 𝟎. 𝟎𝟐 ∴ = 𝟎. 𝟎𝟏 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟏 = 𝟐. 𝟑𝟑, & 𝒆 = 𝟎. 𝟎𝟓
𝟐 𝟐
𝟐.𝟑𝟑 𝟐
𝒑 = 𝟎. 𝟕𝟖, 𝒒 = 𝟏 − 𝒑 = 𝟏 − 𝟎. 𝟕𝟖 = 𝟎. 𝟐𝟐. ∴ 𝒏 = (𝟎.𝟎𝟓) (𝟎. 𝟕𝟖)(𝟎. 𝟐𝟐) = 𝟑𝟕𝟑

Q6. a. A simple random sample of 400 colleges in the United States maintained that 39 colleges use
the text Statistics Made Difficult and Boring. Find a 95% confidence interval for the proportion of
all colleges using this text.
SOLUTION: 𝒑 =The proportion of all colleges using the text Statistics Made Difficult and Boring.
̂𝒒
𝒑 ̂
̂ ± 𝒛𝜶 √ .
When 𝒏 > 𝟑𝟎 and 𝒑 is unknown, an approx. 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝒑: 𝒑 𝒏 𝟐
𝒙 𝟑𝟗
̂= =
𝒙 = 𝟑𝟗, 𝒏 = 𝟒𝟎𝟎, 𝒑 ̂ =𝟏−𝒑
= 𝟎. 𝟎𝟗𝟕𝟓, 𝒒 ̂ = 𝟏 − 𝟎. 𝟎𝟗𝟕𝟓 = 𝟎. 𝟗𝟎𝟐𝟓 . For 𝟗𝟓% CI: 𝟏 −
𝒏 𝟒𝟎𝟎
𝜶
𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐 𝟐

(𝟎.𝟎𝟗𝟕𝟓)(𝟎.𝟗𝟎𝟐𝟓)
Hence 𝟗𝟓% CI for 𝒑: 𝟎. 𝟎𝟗𝟕𝟓 − 𝟏. 𝟗𝟔√ 𝟒𝟎𝟎

Thus the 𝟗𝟓% confidence limits for the proportion of all colleges using the text Statistics Made
Difficult and Boring:
(𝟎. 𝟎𝟔𝟖𝟒, 𝟎. 𝟏𝟐𝟔𝟔)
b. An accounting firm has 1200 clients. From a random sample of 120 clients, 110 indicate very high
satisfaction with the firm’s service interval. Find the proportion a 95% of all clients who are very
highly satisfied with this firm.
SOLUTION: 𝒑 =The proportion of all clients who are very highly satisfied with this firm.
When 𝒏 > 𝟑𝟎 and 𝒑 is unknown, an approx.
̂𝒒
𝒑 ̂ 𝑵−𝒏
̂ ± 𝒛𝜶 √( ) (
𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝒑: 𝒑 ).
𝒏 𝑵−𝟏
𝟐
𝒙 𝟏𝟏𝟎 𝟏𝟏 𝟏𝟏 𝟏 𝑵−𝒏 𝟏𝟐𝟎𝟎−𝟏𝟐𝟎 𝟏𝟎𝟖𝟎
̂= =
𝒙 = 𝟏𝟏𝟎, 𝑵 = 𝟏𝟐𝟎𝟎, 𝒏 = 𝟏𝟐𝟎, 𝒑 ̂ =𝟏−𝒑
= 𝟏𝟐, 𝒒 ̂ =𝟏− = , = = 𝟏𝟏𝟗𝟗 .
𝒏 𝟏𝟐𝟎 𝟏𝟐 𝟏𝟐 𝑵−𝟏 𝟏𝟐𝟎𝟎−𝟏
𝜶
For 𝟗𝟓% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐 𝟐

𝟏𝟏 𝟏
𝟏𝟏 ( )( ) 𝟏𝟎𝟖𝟎
𝟏𝟐 𝟏𝟐
Hence 𝟗𝟓% CI for 𝒑: 𝟏𝟐 − 𝟏. 𝟗𝟔√( ) (𝟏𝟏𝟗𝟗 )
𝟏𝟐𝟎

Thus the 𝟗𝟓% confidence limits for the proportion of all clients who are very highly satisfied with
this firm:
(𝟎. 𝟖𝟔𝟗𝟕, 𝟎. 𝟗𝟔𝟑𝟔)

Page 5 of 8
 NOTES OF CONFIDENCE INTERVAL

Q7. a. In a random sample of 120 large retailers, 85 used regression as a method of forecasting. In
an independent= random sample of 163 small retailers, 78 used regression as a method of
forecasting. Find a 98% confidence interval for the difference between the two population
proportions.
SOLUTION:
Let 𝒑𝟏 =The proportion of large retailers, used regression as a method of forecasting.
𝒑𝟐 =The proportion of small retailers, used regression as a method of forecasting.
When 𝒏𝟏 , 𝒏𝟐 > 𝟑𝟎 and 𝒑𝟏 , 𝒑𝟐 are unknown.
̂𝟏 𝒒
𝒑 ̂𝟏 ̂𝟐 𝒒
𝒑 ̂𝟐
An approx. 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝒑𝟏 − 𝒑𝟐 : (𝒑 ̂ 𝟐 ) ± 𝒛𝜶 √
̂𝟏 − 𝒑 +
𝟐 𝒏𝟏 𝒏𝟐
𝒙𝟏 𝟖𝟓 𝟏𝟕 𝟏𝟕 𝟕
̂𝟏 =
Here 𝒙𝟏 = 𝟖𝟓, 𝒏𝟏 = 𝟏𝟐𝟎, 𝒙𝟐 = 𝟕𝟖, 𝒏𝟐 = 𝟏𝟔𝟑 ∴ 𝒑 = = ̂𝟏 = 𝟏 − 𝒑
,𝒒 ̂𝟏 = 𝟏 − =
𝒏𝟏 𝟏𝟐𝟎 𝟐𝟒 𝟐𝟒 𝟐𝟒
𝒙 𝟕𝟖 𝟕𝟖 𝟔𝟓
̂𝟐 = 𝟐 =
And 𝒑 ̂𝟐 = 𝟏 − 𝒑
,𝒒 ̂𝟐 = 𝟏 − = 𝟏𝟔𝟑
𝒏 𝟏𝟔𝟑
𝟐 𝟏𝟔𝟑
𝜶
For 𝟗𝟖% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟖 ⟹ 𝜶 = 𝟎. 𝟎𝟐 ∴ = 𝟎. 𝟎𝟏 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟏 = 𝟐. 𝟑𝟑
𝟐 𝟐

𝟏𝟕 𝟕 𝟕𝟖 𝟔𝟓
𝟏𝟕 𝟕𝟖 ( )( ) ( )( )
Hence 𝟗𝟖% CI for 𝒑𝟏 − 𝒑𝟐 is: (𝟐𝟒 − 𝟏𝟔𝟑 ) ± (𝟐. 𝟑𝟑)√ 𝟐𝟒 𝟐𝟒 + 𝟏𝟔𝟑 𝟏𝟔𝟑
𝟏𝟐𝟎 𝟏𝟔𝟑

Thus the 𝟗𝟖% confidence limits for the true difference between the proportions of large and small
retailers used regression as a method of forecasting:
(𝟎. 𝟏𝟎𝟒𝟓, 𝟎. 𝟑𝟓𝟓𝟏 )
b. From a random sample of 138 freshmen, 80 indicated that they would library more if the hours
were extended. In an independent random sample of 96 sophomores, 73 responded that they would
use the library more if the hours were extended. Estimate the difference in proportion of first-year
and second-year students responding affirmatively to this question. Use a 95% confidence level.
SOLUTION:
Let 𝒑𝟏 =The proportion of freshmen who indicated that they would use the school’s library more
if the hours were extended.
𝒑𝟐 =The proportion of sophomores, who indicated that they would use the school’s library
more if the hours were extended.
When 𝒏𝟏 , 𝒏𝟐 > 𝟑𝟎 and 𝒑𝟏 , 𝒑𝟐 are unknown.
̂𝟏 𝒒
𝒑 ̂𝟏 ̂𝟐 𝒒
𝒑 ̂𝟐
An approx. 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝒑𝟏 − 𝒑𝟐 : (𝒑 ̂ 𝟐 ) ± 𝒛𝜶 √
̂𝟏 − 𝒑 +
𝟐 𝒏𝟏 𝒏𝟐
𝒙𝟏 𝟖𝟎 𝟒𝟎 𝟒𝟎 𝟐𝟗
̂𝟏 = =
Here 𝒙𝟏 = 𝟖𝟎, 𝒏𝟏 = 𝟏𝟑𝟖, 𝒙𝟐 = 𝟕𝟑, 𝒏𝟐 = 𝟗𝟔 ∴ 𝒑 ̂𝟏 = 𝟏 − 𝒑
= 𝟔𝟗, 𝒒 ̂𝟏 = 𝟏 − =
𝒏 𝟏𝟑𝟖 𝟏 𝟔𝟗 𝟔𝟗
𝒙𝟐 𝟕𝟑 𝟕𝟑 𝟐𝟑
̂𝟐 = = , 𝒒
And 𝒑 ̂𝟐 = 𝟏 − 𝒑
̂𝟐 = 𝟏 − =
𝒏 𝟗𝟔 𝟐 𝟗𝟔 𝟗𝟔
𝜶
For 𝟗𝟓% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟓 ⟹ 𝜶 = 𝟎. 𝟎𝟓 ∴ = 𝟎. 𝟎𝟐𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟐𝟓 = 𝟏. 𝟗𝟔
𝟐 𝟐
𝟒𝟎 𝟐𝟗 𝟕𝟑 𝟐𝟑
𝟒𝟎 𝟕𝟑 ( )( ) ( )( )
Hence 𝟗𝟓% CI for 𝒑𝟏 − 𝒑𝟐 is: (𝟔𝟗 − 𝟗𝟔 ) ± (𝟏. 𝟗𝟔)√ 𝟔𝟗 𝟔𝟗
+ 𝟗𝟔 𝟗𝟔
𝟏𝟑𝟖 𝟗𝟔

Page 6 of 8
 NOTES OF CONFIDENCE INTERVAL

Thus the 𝟗𝟓% confidence limits for the true difference between the proportions of freshmen and
sophomores who indicated that they would use the school’s library more if the hours were extended:
(−𝟎. 𝟐𝟗𝟗𝟑, −𝟎. 𝟎𝟔𝟐𝟏)

Q8 a. A random sample of 100 men contained 61 in favorof a state constitutional amendment to

retard the rate of growth of property taxes. An independent random sample of 100 women
contained 54 in favor of this amendment. Find a 96% confidence interval for the difference between
the population proportions.
SOLUTION:
Let 𝒑𝟏 = The proportion of all men who favour a state constitutional amendment to retard the
rate of growth of property taxes.
𝒑𝟐 = The proportion of all women who favour a state constitutional amendment to retard the
rate of growth of property taxes.
When 𝒏𝟏 , 𝒏𝟐 > 𝟑𝟎 and 𝒑𝟏 , 𝒑𝟐 are unknown.
̂𝟏 𝒒
𝒑 ̂𝟏 ̂𝟐 𝒒
𝒑 ̂𝟐
An approx. 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝒑𝟏 − 𝒑𝟐 : (𝒑 ̂ 𝟐 ) ± 𝒛𝜶 √
̂𝟏 − 𝒑 +
𝟐 𝒏𝟏 𝒏𝟐
𝒙𝟏 𝟔𝟏 𝟔𝟏 𝟑𝟗
̂𝟏 = =
Here 𝒙𝟏 = 𝟔𝟏, 𝒏𝟏 = 𝟏𝟎𝟎, 𝒙𝟐 = 𝟓𝟒, 𝒏𝟐 = 𝟏𝟎𝟎 ∴ 𝒑 ̂𝟏 = 𝟏 − 𝒑
,𝒒 ̂𝟏 = 𝟏 − = 𝟏𝟎𝟎
𝒏 𝟏𝟎𝟎 𝟏 𝟏𝟎𝟎
𝒙𝟐 𝟓𝟒 𝟐𝟕 𝟐𝟕 𝟐𝟑
̂𝟐 = =
And 𝒑 ̂𝟐 = 𝟏 − 𝒑
= 𝟓𝟎, 𝒒 ̂𝟐 = 𝟏 − =
𝒏 𝟏𝟎𝟎
𝟐 𝟓𝟎 𝟓𝟎
𝜶
For 𝟗𝟔% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟔 ⟹ 𝜶 = 𝟎. 𝟎𝟒 ∴ = 𝟎. 𝟎𝟐 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟓 = 𝟐. 𝟎𝟓𝟒
𝟐 𝟐
𝟔𝟏 𝟑𝟗 𝟐𝟕 𝟐𝟑
𝟔𝟏 𝟐𝟕 ( )( ) ( )( )
Hence 𝟗𝟔% CI for 𝒑𝟏 − 𝒑𝟐 is: (𝟏𝟎𝟎 − 𝟓𝟎) ± (𝟐. 𝟎𝟓𝟒)√ 𝟏𝟎𝟎 𝟏𝟎𝟎
+ 𝟓𝟎 𝟓𝟎
𝟏𝟎𝟎 𝟏𝟎𝟎
Thus the 𝟗𝟔% confidence limits for the true difference between the proportions of men and women
who favour a state constitutional amendment to retard the rate of growth of property taxes:
(−𝟎. 𝟎𝟕𝟑𝟐, 𝟎. 𝟐𝟏𝟑𝟐 )
b. Supermarket shoppers were observed and questioned immediately after putting an item in their
cart. Of a random sample of 510 choosing a product at the regular price, 320 claimed to check the
price before putting the item in their cart. Of an independent random sample of 332 choosing a
product at a special price, 200 made this claim. Find a 90% confidence interval for the difference
between the two population proportions.
SOLUTION:
Let 𝒑𝟏 = The proportion of all supermarket shoppers who choose a product at the regular price,
check the price before putting the item in their cart.
𝒑𝟐 = The proportion of all supermarket shoppers who choose a product at the special price,
check the price before putting the item in their cart.
When 𝒏𝟏 , 𝒏𝟐 > 𝟑𝟎 and 𝒑𝟏 , 𝒑𝟐 are unknown.
̂𝟏 𝒒
𝒑 ̂𝟏 ̂𝟐 𝒒
𝒑 ̂𝟐
An approx. 𝟏𝟎𝟎(𝟏 − 𝜶)% Confidence Interval for 𝒑𝟏 − 𝒑𝟐 : (𝒑 ̂ 𝟐 ) ± 𝒛𝜶 √
̂𝟏 − 𝒑 +
𝟐 𝒏𝟏 𝒏𝟐
𝒙𝟏 𝟑𝟐𝟎 𝟑𝟐 𝟑𝟐 𝟏𝟗
̂𝟏 = =
Here 𝒙𝟏 = 𝟑𝟐𝟎, 𝒏𝟏 = 𝟓𝟏𝟎, 𝒙𝟐 = 𝟐𝟎𝟎, 𝒏𝟐 = 𝟑𝟑𝟐 ∴ 𝒑 ̂𝟏 = 𝟏 − 𝒑
= 𝟓𝟏, 𝒒 ̂𝟏 = 𝟏 − =
𝒏 𝟓𝟏𝟎 𝟏 𝟓𝟏 𝟓𝟏

Page 7 of 8
 NOTES OF CONFIDENCE INTERVAL

𝒙 𝟐𝟎𝟎 𝟓𝟎 𝟓𝟎 𝟑𝟑
̂𝟐 = 𝟐 =
And 𝒑 ̂𝟐 = 𝟏 − 𝒑
= 𝟖𝟑, 𝒒 ̂𝟐 = 𝟏 − =
𝒏 𝟑𝟑𝟐
𝟐 𝟖𝟑 𝟖𝟑
𝜶
For 𝟗𝟎% CI: 𝟏 − 𝜶 = 𝟎. 𝟗𝟎 ⟹ 𝜶 = 𝟎. 𝟏 ∴ = 𝟎. 𝟎𝟓 ⟹ 𝒛𝜶 = 𝒁𝟎.𝟎𝟓 = 𝟏. 𝟔𝟒𝟓
𝟐 𝟐

𝟑𝟐 𝟏𝟗 𝟓𝟎 𝟑𝟑
𝟑𝟐 𝟓𝟎 ( )( ) ( )( )
Hence 𝟗𝟎% CI for 𝒑𝟏 − 𝒑𝟐 is: (𝟓𝟏 − 𝟖𝟑 ) ± (𝟏. 𝟔𝟒𝟓)√ 𝟓𝟏 𝟓𝟏 + 𝟖𝟑 𝟖𝟑
𝟓𝟏𝟎 𝟑𝟑𝟐

Thus the 𝟗𝟎% confidence limits for the true difference between the proportions of all supermarket
shoppers who choose a product at the regular price and who choose a product at the special price,
check the price before putting the item in their cart.

(−𝟎. 𝟎𝟏𝟐𝟔, 𝟎. 𝟎𝟔𝟐𝟕)

Q9. a. A survey of 80 randomly selected companies asked them to report the annual income of their
presidents revealed that the average annual income of the presidents is $125000. Assuming that
incomes are normally distributed with a standard deviation of $30,000, determine the 90%
confidence interval estimate of the largest possible mean annual income of all company presidents.
SOLUTION:
Let 𝝁 = The average annual income of the presidents of all companies
𝝈
∵ 𝟏𝟎𝟎(𝟏 − 𝜶)% Upper Confidence Limit for 𝝁 is 𝒙 ̅ + 𝒛𝜶 .
√𝒏
̅ = $𝟏𝟐𝟓𝟎𝟎𝟎 , 𝒏 = 𝟖𝟎 & 𝝈 = $𝟑𝟎, 𝟎𝟎𝟎 .
We are given that 𝒙
For 90% CL: 𝟏 − 𝜶 = 𝟎. 𝟗𝟎 ⟹ 𝜶 = 𝟎. 𝟏 ∴ 𝒛𝜶 = 𝒁𝟎.𝟏 = 𝟏. 𝟐𝟖
𝟑𝟎𝟎𝟎𝟎
Hence 𝟗𝟎% UCL for 𝝁 : 𝟏𝟐𝟓𝟎𝟎𝟎 + (𝟏. 𝟐𝟖) ( )
√𝟖𝟎
Thus the 𝟗𝟎% confidence limit of the largest possible mean annual income of all company
presidents:
𝟏𝟐𝟗𝟐𝟗𝟑
b. To help make a decision about expansion plans, the president of a music company needs to know
how many compact discs teenagers buy annually. Accordingly, he commissions a survey of 250
teenagers. On average twenty one CDs he or she purchased with a standard deviation of three CDs
in the previous 12 months. Estimate with 90% confidence the least mean annual number of CDs
purchased by all teenagers.
SOLUTION:
Let 𝝁 =The mean annual number of CDs purchased by all teenagers.
𝝈
∵ 𝟏𝟎𝟎(𝟏 − 𝜶)% Lower Confidence Limit for 𝝁 is 𝒙 ̅ − 𝒛𝜶 .
𝒏 √
̅ = 𝟐𝟏 , 𝒏 = 𝟐𝟓𝟎, 𝝈 = 𝟑
We are given that 𝒙
For 90% CL: 𝟏 − 𝜶 = 𝟎. 𝟗𝟎 ⟹ 𝜶 = 𝟎. 𝟏 ∴ 𝒛𝜶 = 𝒁𝟎.𝟏 = 𝟏. 𝟐𝟖
𝟑
Hence 𝟗𝟎% LCL for 𝝁 : 𝟐𝟏 − (𝟏. 𝟐𝟖) ( )
√𝟐𝟓𝟎
Thus the 𝟗𝟎% confidence limit of the the least mean annual number of CDs purchased by all
teenagers:
21

Page 8 of 8